Rothesay Life, has announced that it has entered into a bulk annuity transaction with a pension plan of Cobham plc, the FTSE250 aerospace and defence business.
Transaction highlights:
- The transaction is with the Trustees of the Cobham Pension Plan with the support of Cobham plc, covering £280m of pension liabilities in total.
- The policy is being held as an investment by the Trustees.
- UK gilts and cash were exchanged for a bulk annuity insurance policy that provides close matching to the retired members’ benefits.
- The policy gives Cobham a secure, low risk asset with additional protections, such as cover against longevity risk and pension increase risk.
- Administration and payment of members’ benefits are unaffected by this transaction.
The process was run by the Company and its adviser KPMG who led negotiations with insurers. The Trustees were advised by LCP.
Addy Loudiadis, CEO, Rothesay Life, said: “This is Rothesay Life’s tenth transaction worth over £250m and we are continuing to benefit from strong pension fund demand. The Cobham transaction further highlights Rothesay Life’s robust business model and strong execution capabilities. We provided Cobham and the Trustees with price certainty from when we were selected and then agreed contracts quickly.”
Simon Nicholls, Chief Financial Officer of Cobham said: “This transaction, which was prefaced in the Group’s 2012 financial statements and follows two smaller buy-in transactions on separate defined pension plans completed in 2011, represents a significant step towards de-risking the Group’s defined benefit pension plans using the Plan’s assets and adds further levels of security to the Plan’s obligations towards its members.”
Tom Seecharan, Deal Manager at KPMG said: “This transaction was made possible by close collaborative working between the Company and Trustees. We were delighted to help run an efficient and thorough process which allowed both parties to take advantage of the attractive terms available from Rothesay Life for the mutual benefit of the members, Trustees and sponsor.”
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